Both sides have rejected UN calls for an immediate ceasefire
Fighting has intensified in the Gaza Strip between Israeli troops and Palestinian militants.
Residents spoke of heavy machine-gun fire as Israeli troops fought Hamas gunmen near Gaza City. Israel said it launched 60 air strikes overnight.
The conflict has reportedly killed nearly 1,000 Gazans and 13 Israelis.
Diplomatic moves to end the crisis continue, with UN head Ban Ki-moon urging an immediate ceasefire after talks in Egypt with President Mubarak.
Egypt has been leading efforts to broker a ceasefire deal, that could include a new force of peacekeepers to prevent smuggling on its border with Gaza.
President Bashar al-Assad of Syria has called for an end to Israel's military operation in Gaza, warning that the campaign would fuel extremism and terrorism in the Arab and Muslim world.
"The effect of war is more dangerous than war. It is sowing seeds of extremism around the region," Mr Assad said in an exclusive BBC interview.
President Bashar al-Assad of Syria on the Gaza conflict
Meanwhile, three rockets were fired from southern Lebanon towards the northern Israeli city of Kiryat Shmona.
The rockets fired from Lebanon landed on open ground near the city. There are no reports of injuries or damage.
Lebanese security officials say the Israeli army fired eight shells into southern Lebanon in retaliation, the Associated Press news agency reported.
Four rockets were fired on northern Israel from Lebanon last week, prompting fears of a widening of the conflict.
As attempts to end the crisis by diplomatic means continue, Israel pressed ahead with its military offensive overnight. The Israeli military said it hit 60 targets, including 35 weapons-smuggling tunnels on the border with Egypt and a cemetery in Gaza City.
However, analysts say Israel may be holding back from all-out urban warfare in Gaza City.
Israeli strikes on Gaza continue
Intense street fighting could cause heavy casualties on both sides, they say, which would be politically risky less than a month before Israel holds elections.
A newly-released audiotape said to feature the voice of al-Qaeda leader Osama bin Laden has called for a holy war to stop the Israeli offensive in Gaza.
The authenticity of the tape, posted on a number of Islamic militant websites, could not be independently verified.
Speaking at a press conference in Cairo after meeting Egyptian President Hosni Mubarak, Mr Ban repeated his call for an immediate ceasefire in Gaza. He also said he would not visit Gaza until after a ceasefire had been implemented.
Israel had planned to send its chief negotiator, Amos Gilad, to Cairo to meet with Mr Ban, but the trip was cancelled.
Ban Ki-moon: "Both sides must stop fighting now"
Israeli media have reported divisions within the government.
Defence Minister Ehud Barak is said to favour a week-long ceasefire in Gaza to allow for the delivery of much-needed supplies and to give politicians the breathing space to hammer out a long-term truce.
But Prime Minister Ehud Olmert says he wants to press on with the military campaign for however long it takes.
After Cairo, Mr Ban will visit Israel and the West Bank as well as other regional powers.
Mr Ban has said he will also be encouraging initiatives to open border crossings with Gaza, which is subject to an Israeli blockade, and provide humanitarian aid.
The UN chief is not scheduled to meet representatives of Hamas, but he has already held talks with Saudi King Abdullah amid reports Cairo is putting increasing pressure on Hamas leaders to accept a truce proposal.
A spokesman for Hamas, which controls Gaza, said any ceasefire agreement would have to entail a halt to Israeli attacks, a complete withdrawal of Israeli forces and the opening of border crossings to end the blockade of Gaza.
The Israeli foreign ministry has said there is no guarantee Hamas would respect any ceasefire agreement.
Both Hamas and Israel rejected last week's UN Security Council resolution calling for an immediate ceasefire.
'Wiping out Palestinians'
Humanitarian concerns have increased amid the fighting, although some aid is getting through to Gaza during daily three-hour lulls Israel has allowed to let in supplies.
On Tuesday, a senior UN aid official appealed to the international community to provide protection for civilians in Gaza, calling it a "test of our humanity".
"Whatever is being done is not sufficient until the guns fall silent," John Ging said.
Since Israel's offensive on Gaza began on 27 December, nearly 1,000 Gazans have been killed, 4,400 have been injured, and an estimated 90,000 have fled their homes, according to Palestinian figures.
Thirteen Israelis have died, three of them civilians, Israel says.
It is impossible to independently confirm casualty figures as Israel has refused to allow international journalists to enter Gaza.
A UN watchdog has accused Israel of showing a "manifest disrespect" for the protection of children in Gaza.
More than 40% of those killed in Gaza were women or children, said the UN Committee on the Rights of the Child, even though Israel had signed a UN protocol condemning attacks on places where children were likely to be present.
Palestinian Authority President Mahmoud Abbas has accused Israel of trying to "wipe out" his people.
But Israeli Defence Minister Ehud Barak said the military operation would continue in order to stop Hamas rockets being fired into Israel and to prevent arms smuggling into Gaza.
Asked if Israel's war aims had been achieved, he said: "Most of them, probably not all of them."
And militants have kept up rocket attacks, firing 25 mortars and rockets into southern Israel on Tuesday, Israel's army said.
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